Yes, it is encryption by the cable company that makes the converter box necessary. They have done this for several reasons. The most obvious is to prevent theft of service. Who hasn't known or at least heard of someone who tapped into the cable company's system and got their service for free?
However, the biggest reason is by having a system that requires a set-top box the cable company can then tap into the video on demand market, which is where they make their big bucks. The converter box you get at check-in is usually a special "budget commercial box" that doesn't allow two way communications, but every subscriber's home boxes will allow you to get all that juicy pay per view content.
The alternative for the park is to set up their own private cable system with head end units, converters, amplifiers and the like. They will still pay a per site fee to the cable company, but the hookups for the guests will remain as they were in the past just hookup, scan for channels and you are good to go. The downsides to the park are such systems are very expensive to purchase (10s of thousands of dollars), the cable company may decide to not allow the park the use of the current wiring, requiring another multiple tens of thousands of dollars or upgrades by the park. Plus, such systems require an individual converter for each channel the park broadcasts and there is a fee for each channel. Thus it is really only practical to have a few dozen channels at most. Kind of hard for a park to justify a few hundred dollars for a converter and a recurring monthly charge to offer a channel only one or two people would ever want to watch, so the parks are left to decide what is a popular channel to include and what channels should just be left off (and there are certain channels that carry a high premium to include, I.E. ESPN at over $6.00 per month per site, a very high price for a seasonal park to pay ($7200 year for a 100 site park only open 6 months a year since you have to pay for the services on an annual contract with many cable companies and with parks like mine, ESPN doesn't really have a lot of customer valuable content in the summer, since it is really only golf, tennis and baseball where the big draw to ESPN is football, basketball and hockey seasons).
So to make the long story short, when the cable company goes to encryption there are only three bad options for the parks. 1. the converter box 2. Big investments in a private cable system 3. Stop offering cable.
(for the record, we chose #2, sans ESPN)